Memos
Recently, we have received inquiries regarding Fannie Mae and Freddie Mac’s new safety and soundness project review requirements for condominiums and cooperative projects.
Under Texas law, prior to January 1, 2022, persons buying residence property had to wait until the year following acquisition to file for a homestead ad valorem property tax exemption.
Section 50(a)(6)(H) of Article XVI of the Texas Constitution prohibits a home equity loan from being secured by any additional real or personal property other than the borrower’s homestead.
COMMISSIONS AMEND TEXAS ADMINISTRATIVE CODE TO MAKE CLEAR LENDERS MAY USE ELECTRONIC DISCLOSURES, DOCUMENTS, AND SIGNATURES FOR HOME EQUITY LOANS AND THAT OUT-OF-STATE BANKS MAY ORIGINATE HOME EQUITY LOANS
The Search Committee of The Finance Commission of Texas narrowed its search for a new commissioner to a single candidate and recommended a final interview with the entire Finance Commission.
Over the past few months, we have received a number of questions regarding whether an individual who is a non-owner may be a co-borrower or co-signer on a 50(a)(6) Texas home equity loan.
In Texas, the term “cash out” is commonly used to describe a home equity loan originated under Section 50(a)(6), Article XVI of the Texas Constitution.
On June 18, 2021, we issued a Memorandum on the fact that President Joe Biden signed into law the Juneteenth National Independence Day Act.
Recently, we have received some inquiries seeking clarification concerning the current definition and underwriting requirements relating to “general” qualified mortgages and the ability to repay requirements in effect under Regulation Z.
On Wednesday, June 23, 2021, the Supreme Court held that the structure of the Federal Housing Finance Agency (“FHFA”)—led by a single director who may only be removed for cause—violates Constitutional separation of powers.
On Thursday, June 17, 2021, President Joe Biden signed into law the Juneteenth National Independence Day Act.
On February 3, 2021, Freddie Mac issued Bulletin 2021-4, which announced new and updated requirements for the use of a power of attorney (“POA”). These changes are meant to serve as a “clarification” of the changes Freddie Mac previously announced on December 2, 2020 (Bulletin 2020-45). On March 3, 2021, Freddie Mac announced that these changes are effective for applications received on or after June 30, 2021.
Recently, the Finance Commission of Texas and the Texas Credit Union Commission (the “Commissions”) adopted several amendments to the home equity lending interpretations in the Texas Administrative Code. The amendments substantively addressed the following topics: (i) the repayment schedule of the loan and the ability to modify the loan post-closing; (ii) what constitutes a “state of emergency” under the exception to the one-year seasoning requirement; (iii) what areas at a proper location a loan may close at; (iv) when electronic copies of required documents can be provided to owners; and (v) when lenders may execute the acknowledgment of fair market value. The Commissions also made typographical corrections to two rules.
The required rule review of Chapters 80 and 81 by the Texas Department of Savings & Mortgage Lending concluded Friday December 11th with final adoption by the Finance Commission of Texas. These changes will be published in the Texas Register on January 1, 2021 and become effective immediately upon publication.
Effective September 1, 2020 Texas Department of Savings and Mortgage Lending Director of Mortgage Examination, Tony Florence, also assumed the duties as Director of Licensing. Director Florence has already made several positive changes including adding additional licensing staff. Approximately 16,000 or 50% of all MLO’s have been already been approved for renewal during the first three weeks. This percentage is much higher compared to any prior year’s renewal rate.
Refinances now make up over 60% of the loan applications according to the latest MBA Weekly Survey. As refinances fill lenders’ pipelines, we thought it would be timely to revisit the particular requirements and aspects of the Texas 50(f)(2) loan, as we have seen some lenders overlook critical requirements, which delayed some loan closings.
Texas law requires all State agencies to perform a rule review every four years. This process facilitates: elimination of unnecessary rules, needed clarifications, and reconciliation with either changes in current practices or changes in other sections of the law. The Texas Department of Savings and Mortgage Lending (SML) has completed their review of rules related to non-depository mortgage servicers, mortgage companies, mortgage bankers, and mortgage originators.
Last week we informed you of a new directive from Fannie Mae and Freddie Mac (collectively the “GSEs”) to charge an adverse market fee on refinance loans delivered to the GSEs on or after September 1, 2020. In response to the controversial announcement, the Mortgage Bankers Association’s grassroots advocacy arm, the Mortgage Action Alliance, issued a “Call to Action” and, in response, over 85,000 messages were delivered to Congressional leadership in opposition of the new fee. We are pleased to report that yesterday afternoon, the Federal Housing Finance Agency (“FHFA”) directed the GSEs to delay the implementation of the fee. The new effective date for the imposition of the Adverse Market Refinance Fee (“AMRF”) is now December 1, 2020.
On Wednesday, August 12, the Federal Housing Finance Agency (“FHFA”) announced that Fannie Mae and Freddie Mac (collectively the “GSEs”) will impose a 50-basis-point adverse market fee on refinance loans purchased by the GSEs. Effective for loans purchased by the agencies on or after September 1, 2020, the Adverse Market Refinance Fee (“AMRF”) will be assessed on cash-out and no cash-out refinances, with the exception of some construction-to-permanent mortgages.
State regulators have shifted to remote operations just like many financial service companies. This adjustment includes significant expansion of offsite examination procedures. Additionally, on behalf of state regulators, the Conference of State Bank Supervisors (CSBS) and NMLS have created a comprehensive online resources center for mortgage originators and their customers regarding Covid-19. Listed below are some of the most helpful links.
Today, the U.S. Supreme Court held that the President has the authority to remove the Director of the Consumer Financial Protection Bureau at will, but that the CFPB may otherwise continue operating. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act established the CFPB and set forth that it would be headed by a single director for a five-year term who may only be removed for “inefficiency, neglect of duty, or malfeasance in office.”
Texas recognizes both community property rights and homestead rights in real property. When title to real property is held in the name of only one spouse, questions often arise as to whether either (or both) of these rights require that a non-titled spouse sign the security instrument in order to perfect the lien.
We want to inform you that the order of the Governor, which temporarily suspended the requirements of Texas Civil Practice and Remedies Code Section 121.006(c)(1) to permit that a notary to witness wet-signed documents in a real estate transaction by electronic means, which was originally set to expire on May 30, 2020, has now been extended until June 30, 2020, unless the state of emergency for COVID 19 is terminated sooner. This extension of the remote ink signed notary rules should provide greater flexibility for the notarization of documents in Texas in light of Covid 19 and the response to the pandemic.
Equitable subrogation is an important legal principal under Texas law that allows a lender whose loan proceeds are used to pay off an existing lien to claim the lien priority of the lien being paid off by the new lender. In 2007, the Texas Supreme Court expressly held that common law subrogation applies in favor of a lender making a home equity loan made under Tex. Const. Art. XVI, Sec. 50(a).
We want to inform you that Governor Abbott today issued a press release regarding an Order temporarily suspending the requirements of Texas Civil Practice and Remedies Code Section 121.006(c)(1), which contemplates that a notary witness a wet-signed document in person. This order of the governor is attached and should provide greater flexibility for the notarization of documents in Texas in light of Covid 19 and the response to the pandemic.
Please be advised that Governor Abbott issued a press release this afternoon which indicates he has temporarily suspended the statutory requirement that a person appear before a Texas notary for certain documents to be acknowledged. This directive specifically suspends the in-person acknowledgement requirement for execution of a durable power of attorney.
We wanted to let you know that on March 31, 2020, Fannie Mae updated Lender Letter (LL-2020-03) to include new requirements and flexibility in the use of Powers of Attorney (“POA”) in purchase and limited cash-out refinance transactions. Fannie Mae originally issued the Lender Letter on March 23, 2020 to address industry questions and concerns due to COVID-19 (coronavirus). We recommend you review the entire Lender Letter as in addition to the new policies affecting POAs, it contains several new underwriting requirements, expands the permissible use of remote online notarization and addresses title policy concerns, among other issues.
Fannie Mae Lender Letter - LL-2020-03
Fannie Mae Selling Guide - B8-5-05 - Requirements for use of POA
We wanted to alert you to the attached informal guidance that has been issued by the Texas Finance Commission agencies, including the Texas Department of Banking, the Texas Department of Savings and Mortgage Lending, the Texas Office of Consumer Credit Commissioner, and the Texas Credit Union Department (the “Finance Commission Agencies”). The Finance Commission Agencies make clear this is INFORMAL GUIDANCE and reliance on such guidance does NOT provide any safe harbor to avoid potential civil litigation against any lender.
Please let us know if you have any questions regarding this information.
As COVID-19 cases continue to increase and the public response and precautions
become more pronounced, we wanted to take a moment to reassure you regarding the
services our firm provides for you and our other clients. For many years, we have had
technology and processes and procedures in place to allow most of our team members to
work from home to better respond to our clients’ needs, subject to any client restrictions
on the practice.
Please let us know if you have any questions regarding this information.
An assumption occurs when a creditor expressly agrees in writing with a subsequent consumer to accept that consumer as a primary obligor on an existing residential mortgage transaction. Before the assumption occurs, the creditor shall make new disclosures to the subsequent consumer, based on the remaining obligation. 12 C.F.R. § 1026.20(b).
Please let us know if you have any questions regarding this information.
As you may be aware, prior to January 1, 2019, there was a special Texas title fee
called a Guaranty Fee that was collected on Texas title policies. This fee was collected on
each Texas title policy and was placed into a fund that would then be available to subsidize
the audit function of the title regulator and to compensate parties for certain losses on title
policies where the title provider was otherwise unable to pay.
Please let us know if you have any questions regarding this information.
This memo pertains to VA issued Circular 25-18-30 on December 17th summarizing the new rules for cash-out refinance loans (see link below). These requirements include new disclosures: “VA Type I Cash-Out Refinance, Fee Recoupment Certification” and “VA Type I/II Cash-Out Refinance, Net Tangible Benefit and Loan Comparison Disclosure”. Examples can be found at the link below.
Please let us know if you have any questions regarding this information.
This memo addresses the suspension of the Guaranty Assessment Recoupment Charge or GARC. This is a special fee that Texas title companies have been collecting for each title policy for Texas properties. Note that if loan documents are signed during 2018, but the loan does not fund until 2019, the fee is still required to be collected, as DOCUMENT SIGNING is the trigger for determining the date of the closing.
Please let us know if you have any questions regarding this information.
This memo discusses the recently-declared National Day of Mourning in honor of the passing of George HW Bush, the 41st President of the United States, impacts how dates are calculated for rescission under the Truth in Lending Act and other dates for TRID purposes.
Please let us know if you have any questions regarding this information.
The Federal Reserve Board, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency issued a joint statement on September 11, 2018 stating that supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance. This pronouncement is a significant departure from the guidance of the agencies under the Obama administration, where both commentary and enforcement actions were deemed by certain of the agencies to be elevated to the force of law.
Please let us know if you have any questions regarding this information.
As you may be aware, the Texas Department of Savings and Mortgage Lending (“SML”) is the subject of Sunset Review this year. The Texas Sunset Commission conducted their first hearing last Thursday, May 24th. Doug Foster, the former Commissioner of the SML and the Director of Regulatory Affairs for Polunsky Beitel Green, among others, testified before the Commission. This memo outlines the details of that hearing.
Please let us know if you have any questions regarding this information.
This is a Memo in regard to the Sunset Review of the Texas Department of Savings & Mortgage Lending. The Texas Sunset Commission has recently released its report, which recommends abolishing the Texas Department of Savings and Mortgage Lending (SML) and transferring its regulatory duties to the Texas Banking Department. The Sunset Commission has scheduled hearings for the Finance Commission of Texas and its agencies at 9:00am Thursday, May 24, 2018, in Room E2.030, Capital Extension, in Austin. This memo outlines the details of the process and the potential implications of eliminating this department.
Please let us know if you have any questions regarding this information.
Please be advised that the publication date in the Federal Register for the new TRID Final Rule addressing the “black hole” is May 2, 2018. The Black Hole refers to the inability, under the original TRID rule, for a Lender to reset tolerances with a Closing Disclosure, except during the four business days prior to closing.
Please let us know if you have any questions regarding this information.
This memo concerns the most recent Texas Attorney General Opinion issued on February 26, 2018 stating that the Texas Constitution, article XVI, subsection 50(a)(6)(H) prohibits a U.S. Department of Veterans Affairs cash-out refinance loan. The complete Attorney General Opinion and explanation has been included at the end of the Client Memo.
Please let us know if you have any questions regarding this information.
We wish to advise you that the Texas Finance Commission has APPROVED adoption of certain interpretative guidance regarding home equity lending in Texas. This proposed guidance was also considered and approved for adoption when the Texas Credit Union Commission which met on March 9, 2018. The new interpretations should assist Texas mortgage lenders in more easily implementing the recently enacted changes to home equity lending in Texas.
Please let us know if you have any questions regarding this information.
This memo advises of a proposed adoption of certain interpretative guidance by the Texas Finance Commission regarding home equity lending in Texas. The proposed guidance will be considered for adoption when the Texas Finance Committee meets on February 16, 2018.
Please let us know if you have any questions regarding this information.
This memo describes the changes to the Rules for the Refinance of an Existing Texas Home Equity Loan to a Non-Home Equity Loan. We have also provided a sample of the affidavit.
Please let us know if you have any questions regarding this information.
Sample Affidavit Regarding Refinance of an Existing Home Equity Loan to a Non-Home Equity Loan
The Constitutional Amendment to Home Equity Lending was passed by the voters of Texas. Attached is a Client Memo regarding the changes which will be effective January 1, 2018. Also, attached are the constitutional changes from the official Senate bill.
Please let us know if you have any questions regarding this information.
This memo advises of the passage of SJR 60 by the Texas House and Senate in the form of a constitutional amendment. A copy of the proposed amendments can be found at the link below.
This memo describes the changes to the Texas Durable Power of Attorney. We have also provided a sample of the new Durable Power of Attorney.
This memo regards bills from the 85th Texas Legislature that may impact mortgage lending and the financial services industry.
This memo regards a recent decision of one of the Texas Court of Civil Appeals Courts that impacts Texas Home Equity Lending.
This memo document offers some suggestions about Mortgage Loan Officers renewing their Texas state license as well as information about other state renewal requirements.
As everyone should know by now, the Know Before You Owe rules regarding the TILA RESPA Integrated Disclosures go into effect for applications taken on or after October 3, 2015.
On Friday June 25, 2015, the United States Supreme Court rendered its decision in the Texas Department of Housing and Community Affairs case.
On Friday June 26, 2015 at 9:00 AM, the United States Supreme Court rendered its decision in the Obergefell case.
On June 1, 2015, the United States Supreme Court issued a ruling in Bank of America, N.A. vs. Caulkett1, an important ruling in protecting the lien rights of second lienholders.
The Texas Department of Savings and Mortgage Lending is experiencing an increase in violations for failure to provide complete versions of Texas State required disclosure forms.
As most of you are probably aware, a major change is coming in the mortgage industry on August 1, 2015.
As you are probably aware, on January 31, 2014, the Texas Supreme Court issued its supplemental decision in The Finance Commission of Texas, et al v. Valerie Norwood, et al, and held that, in the context of a transaction originated under Article XVI, Section 50a6 of the Texas Constitution (a “Texas Home Equity Loan”) both pre-paid per diem interest and bona fide discount points are “interest” and are NOT fees “necessary to originate, evaluate, maintain, record, insure, or service” the loan and are therefore NOT subject to the 3% fee cap applicable to a Texas Home Equity Loan.
As we previously informed you, the Texas Finance Commission has been working on the proposed amendments to the Texas Administrative Code to implement the Norwood decision.
As you are probably aware, on January 31, 2014, the Texas Supreme Court issued its supplemental decision in The Finance Commission of Texas, et al v. Valerie Norwood, et al, and held that, in the context of a transaction originated under Article XVI, Section 50a6 of the Texas Constitution (a “Texas Home Equity Loan”) both pre-paid per diem interest and bona fide discount points are “interest” and are NOT fees “necessary to originate, evaluate, maintain, record, insure, or service” the loan and are therefore NOT subject to the 3% fee cap applicable to a Texas Home Equity Loan.
Today the Texas Supreme Court rendered its Opinion in Sims v. Carrington Mortgage Services. In this case, the United States Court of Appeals for the Fifth Circuit certified the four questions to the Texas Supreme Court regarding whether a particular transaction of a Texas home equity loan is a modification or a refinance for home equity purposes.
Bill White, Chair of the Texas Finance Commission, announced on Tuesday, April 22nd that Caroline Jones has been selected as the new Commissioner of the Texas Department of Savings & Mortgage Lending. Ms. Jones appointment will be effective as of June 1st
We wanted to take a minute to advise you of a recent decision of the Dallas Court of Appeals relating to a Texas home equity loan. In Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2006-1 Asset-Backed Certificates, Series 2006-1 v. Lonzie Leath, the borrower, Mr. Leath, had sought to invalidate a home equity loan on the grounds that the loan exceeded 80% of the fair market value of the property, which as you probably know is the limit imposed by Article XVI, Section 50(a)(6)(B) of the Texas Constitution.
The case challenged the promulgated interpretative rules of the Finance Commission dealing with certain provisions of the Texas home equity lending requirements of Texas Constitution, Article XVI, Section 50, Subsections (a)(6)(E) and (a)(6)(N).
